CryptoBridgeDecentralized ExchangeBlockchain

Vishal Bachani

Wed Sep 28 2022

Vishal Bachani

CryptoBridge is a decentralized exchange built on the BitShares platform. They are committed to offering a range of major cryptocurrencies and altcoins on their exchange. The exchange uses the Graphene blockchain to process up to 100,000 transactions per second. CryptoBridge offers cloud accounts and more secure local wallets for traders to access their assets from anywhere.

This blog post will examine what a crypto bridge is and how it works. Stay Connected with us.

What is a Crypto Bridge?

A crypto bridge works just like the bridges we know in the physical world. Just like a physical bridge connects two physical locations, a crypto bridge connects two blockchain ecosystems. Bridges facilitate communication between crypto by transferring information and assets.

Consider an example:

You are from America and planning a trip to Europe. I have US dollars, but I need euros to spend. Money changers are available for a small fee to convert USD to EUR. But what if you want to do a similar exchange to use another blockchain? Say you want to exchange ETH on Ethereum main net for ETH on Arbitrum. Like the EUR currency exchange, we need a mechanism to move  ETH from Ethereum to Arbitrum. Bridges make such transactions possible. In this case, Arbitrum has a native bridge that allows ETH to be transferred from the mainnet to Arbitrum. 

How does a Cryptobridge work?

A bridge can be viewed as a simple exchange of information between blockchains. In other words, the primary function of the bridge is to enable the bi-directional exchange of information between Blockchain A and Blockchain B via the protocol that enables this connection. Of course, this is an easy way to understand how the bridge works, but the basic idea is that it helps you understand exactly how this exchange of information takes place. The following can be summarized in four steps.

A bridge sits between chains A and B and forms the basic structure for their operation. If you want to issue tokens from A > B, go to the bridge and specify with A the number of tokens you want to exchange and with B the destination address. Create a bridge block that delivers at A and balances at the vault. Then, at B, the exact amount of tokens is created and sent to the address specified at B. A's token is locked as a guarantee of B's ​​token and can only be recovered by doing the reverse process.

Types of bridge

Bridges have many types of designs and intricacies. Generally, bridges fall into two categories: trusted and trustless bridges.

Trusted Bridges Trustless Bridges
A trusted bridge relies on a central entity or system for its operation. Trustless bridges work with smart contracts and algorithms.
They have trust assumptions regarding the storage of funds and the safety of bridges. Users mainly rely on the reputation of the bridge operator. In other words, the bridge's security is the same as the security of the underlying blockchain.
Users must relinquish control over their crypto assets. Through Smart contracts, Trustedless bridges allow users to remain in control of their funds.

In short, we can say that trusted bridges have trust assumptions, while trustless bridges have minimized trust and do not create new trust assumptions beyond those of the underlying domain.

These terms can be explained as follows:

  • Trustless: Same security as the underlying domain.
  • Trust Assumption: Adding external verifiers to the system removes the security of the underlying domain and makes crypto economically less secure. Let's look at an example better to understand the main differences between the two approaches.

  • Imagine you are at an airport security checkpoint. There are two types of checkpoints:

    1. Manual Checkpoint - Operated by an officer who manually verifies all ticket details and identities before issuing a boarding pass.
    2. Self-check-in - performed by a machine where you enter your flight details and receive your boarding pass once all checkout is complete. Manual checkpoints are similar to the trusted model because they are third parties. Depends on the official. Users trust authorities to make the right decisions and use their personal information correctly.
    3. Self-check-in resembles the trusted model in that it removes the operator's role and uses technology to operate it. Users are always in control of their data and do not have to entrust their personal information to third parties. Many bridging solutions use these two extreme models with varying degrees of unreliability.

    What does this mean for crypto users?

    It should be recognized that security is still a broad topic. Luckily for Wormhole users, sponsor Jump Crypto eventually covered the loss of the bridge. Axie Infinity creator Sky Mavis said he would reopen the bridge at the end of June and refund users. However, such compensation is not guaranteed and should not be expected every time. Ethereum co-founder Vitalik Buterin said that the bridge is not secure and that users can stay safe by simply holding their tokens on the native blockchain.

    Why do Crypto Bridges Matter?

    The most significant advantage of cryptocurrency bridges is the interoperability solutions they offer. Anyone using cryptocurrencies is familiar with the scalability issues faced by large projects such as Bitcoin and Ethereum. As these projects grew, processing speeds slowed down, while gas prices, especially on Ethereum, skyrocketed. While these projects have various solutions for scaling during testing (such as Bitcoin's Lightning Network and Ethereum's Layer 2 solution), crypto bridge support blocks some of the dApp's traffic with less congestion. It provides a way to migrate to chains. For example, Ethereum developers can use bridges to offload some of their transactions to a faster chain, improving speed and reducing the load on the Ethereum ledger.

    Smaller blockchain developers also benefit. As more and more of his Ethereum users join the ecosystem, developers on smaller chains will be encouraged to run their DApps on these bridges as they will be able to reach a more extensive user base by increasing the bridges. This acquisition also provides access to the talent available in the Ethereum ecosystem.

    However, cryptocurrency bridges have the same drawbacks as DApps based on smart contracts. Smart contract abuse has stolen vast sums of money, destroying trust and fundraising goals. Bridging smart contracts to a blockchain with weaker security can cause problems for secure projects.

    Are you interested in keeping up with the latest crypto developments? Stay connected with Reveation Labs and deliver these valuable insights straight to your inbox. As always, be careful when buying or transferring money. Please note that all crypto transactions are final and cannot be reversed. Always protect your personal information.

    Follow Reveation Labs to stay up to date on essential blockchain developments.


    Cryptobridge Decentralized exchanges offer a trustworthy, low-cost, and peer-to-peer way to trade cryptocurrency. The process of trading on a decentralized exchange is similar to a regular stock exchange. However, when you buy or sell cryptocurrency, you do not need a third party to help with the transaction. All of the transactions are stored in the blockchain. In this blog post, we have discussed what a cryptocurrency bridge is and how it works.

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